Fraud probe to target Madoff niece and SEC official: Report

WASHINGTON: The US Securities and Exchange Commission will examine the relationship between Bernard Madoff's niece and a former SEC official as part of the probe of a 50-billion-dollar investment fraud, the Wall Street Journal said on Wednesday.

Madoff's niece, Shana Madoff, married former SEC attorney Eric Swanson in 2007, said the newspaper.

SEC chairman Christopher Cox announced Tuesday that the watchdog would investigate why almost a decade of warnings - including an examination of staff contact with Madoff's family - did not uncover the fraud sooner.

"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations," Cox said.

The probe will "include all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm," he said.

Nobody was named as a probe target. But in a interview with the Wall Street Journal, SEC inspector general David Kotz said the investigation "intended to examine the relationship between Mr Madoff's niece and Mr Swanson."

Before leaving the commission in 2006, Swanson worked for 10 years as a senior inspections and examination official. Swanson dated Shana Madoff for a year before marrying, his spokesman told the Journal.

In a statement, Swanson's spokesman acknowledged "the compliance team he helped supervise made an inquiry about Bernard Madoff's securities operation," but gave no further details.

Swanson will "fully cooperate" with the SEC investigation, a second spokesman said was quoted as saying.

Cox on Tuesday acknowledged that SEC reviews of Madoff's firm had found "credible and specific allegations" over the last decade that "were repeatedly brought to the attention of SEC staff, but were never recommended to the commission for action."

Madoff who was arrested last on Thursday on accustions that he defrauded 50 billion dollars from investors was to appear in court on Wednesday.